Siemens 2013 Annual Report Download - page 192

92 A. To our Shareholders
117 B. Corporate Governance 155 C. Combined Management Report
156 C. Business and economic environment
173 C. Financial performance system
179 C. Results of operations
192 C. Financial position
204 C. Net assets position
207 C. Overall assessment of the economic position
209 C. Subsequent events
210 C. Sustainability
227 C. Report on expected developments and
associated material opportunities and risks

C.. Principles and objectives
of financial management
Siemens is committed to a strong financial profile, which pro-
vides the financial flexibility to achieve growth and portfolio
optimization goals largely independent of capital market con-
ditions.
Financial management at Siemens is executed according to ap-
plicable laws and internal guidelines and regulations. It in-
cludes the following activities:
C... LIQUIDITY MANAGEMENT
Our principal source of financing is cash inflows from operat-
ing activities. Corporate Treasury generally manages cash and
cash equivalents for Siemens and has primary responsibility
for raising funds in the capital markets for Siemens through
various debt products, with the exception of countries with
conflicting capital market controls. The relevant consolidated
subsidiaries in these countries obtain financing primarily from
local banks. Siemens follows a prudent borrowing policy that
is aimed towards a balanced financing portfolio, a diversified
maturity profile and a comfortable liquidity cushion. As of Sep-
tember , , Siemens held €. billion in cash and cash
equivalents, mainly in euro, which were predominantly man-
aged by Corporate Treasury. Especially since the beginning
of the global financial markets crisis, Siemens monitors fund-
ing options available in the capital markets, trends in the avail-
ability of funds and the cost of such funding very closely in or-
der to evaluate possible strategies regarding its financial and
risk profile.
Corporate Treasury enters into reverse repurchase agreements
with financial institutions with investment grade credit rat-
ings. Siemens holds securities as collateral under these agree-
ments via a third party (Euroclear) and is permitted to sell or
re-pledge the securities. The extent to which Siemens engages
in transactions involving reverse repurchase agreements de-
pends on its liquidity management needs and the availability
of cash and cash equivalents which varies from time to time.
For further information on reverse purchase agreements, see
NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
C... CASH MANAGEMENT
Cash management comprises the management of bank part-
ner relationships and bank accounts as well as the execution
of payments, including the administration of cash pools, on a
global level. Siemens strives to raise efficiency and transparen-
cy through a high level of standardization and continuous
advancement of payment processes. Where permissible, the
execution of intercompany and third party payments is effect-
ed centrally through group-wide tools with central controls to
ensure compliance with internal and external guidelines and
requirements. To ensure efficient management of Siemens’
funds, Corporate Treasury has established a central cash man-
agement approach: to the extent legally and economically fea-
sible, funds are pooled and managed centrally by Corporate
Treasury. Conversely, funding needs within Siemens are cov-
ered centrally by Corporate Treasury via intercompany current
accounts and / or loans where legally and economically feasible.
C... FINANCIAL RISK MANAGEMENT
Investments of cash and cash equivalents are subject to credit
requirements and counterparty limits. Corporate Treasury
pools and centrally manages Siemens’ interest rate, certain
commodity and currency risk exposures and uses financial de-
rivative instruments in transactions with external financial in-
stitutions to offset such concentrated exposures. Especially
since the beginning of the global financial market crisis,
Siemens monitors counterparty risk in its financial assets and
financial derivative instruments very closely. For more detailed
information about financial risk management at Siemens, see
NOTE  in D. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
C... MANAGEMENT
OF POST-EMPLOYMENT BENEFITS
Our funding policy for post-employment-benefits is part of our
overall commitment to sound financial management, which
includes a continuous analysis of the structure of our pension
liabilities. For more detailed information about our pension
plan funding, see C... POST-EMPLOYMENT BENEFITS.
C... CAPITAL STRUCTURE MANAGEMENT
To effectively manage its capital structure, we seek to maintain
ready access to the capital markets through various debt prod-
ucts and to preserve its ability to repay and service its debt
obligations over time. For further information on capital struc-
ture management, see C.. CAPITAL STRUCTURE.
C. Financial position